FBI begins investigation into eToys saga

It was anonymous information from some true public servants that led me to the knowledge that Roberta DeAngelis (the replaced REgion 3 US Trustee) was secretly promoted to General Counsel of the Exec Office of US Trustee’s (EOUST) when DOJ Deputy Director Lawrence Friedman Resigned.

Some other (or maybe same group) of concerned federal public servant(s) also informed me that the DE US Attorney (Colm Connolly) had a vested interest in burying the investigation and prosecution of the www.MNAT.com law firm.

It has now been 3 years since the US Attorney in CA actually Shut down the Public Corruption Unit and audaciously threatened Asst US Attorney’s to keep their mouths shut or else.

Their illegal endeavor to cover up the organized criminal bankruptcy ring of Goldman Sachs, Bain, Paul Traub and MNAT has thus far succeeded. The 2 FBI agents I spoke to have never done anything of consequence. I am tempted to name them both. But will call them 1 more time.

Meanwhile – our efforts to halt the cronyism, tyranny and corruption that is incestuously infecting our federal systems of justice has given us a new break. In a week or so – we are about to submit a brief to the FBI, SEC, DOJ and IRS about a former Deputy Director of the DOJ who is involved in a scheme to defraud that also involves the Cayman Islands.

Stay Tuned!

UPdate June 7 2010

Rogue element within federal system of justice

seeks to halt investigations.

When proof was provided of cronyism,

Corruption and Cover Up.

A brother of an Asst US Attorney, (purportedly) committed suicide. Even if it was such – the fact of the matter is the tragedy might have been prevented had the DE Dept of Justice not give Tom Petters partner (Paul Traub) illegal immunity and promise of willful blindness. (see a belated press story on suicide of Marty Lackner brother of MN Asst US Attorney J Lackner (here)).

Paul Traub is partner

Tom Petters and Marc Dreier

Tom Petters with the assistance of Paul Traub, Larry Reynolds (a man under investigation by the IRS while in WISTEC) was able to achieve a $3.7 Billion dollar Ponzi Scheme and the MN DOJ declined to investigate or prosecute Petters for almost a decade. Marty Lackner was involved in $1 billion dollars of the scheme and committed his purported suicide as a man in his forties, with children and not under any publicly announced indictment (if not for his untimely demise – no one may have never known of his connection).

Madoff related party purported suicide

When we reached out to persons who contacted us in Florida about Paul Traub’s possible Madoff connections – Picower purportedly committed suicide (see one initial story (here))

Then Petters associate commits suicide

Another purported suicide happened in Europe when the FBI first raided and a more recent (indirectly) connected suicide has transpired of Petters associate Denny Hecker

We have had reviews by the DOJ, the Admin of US Courts, Senate Sgt at Arms, Fed agencies galore, NASDQ and more. The slow, but relentless wheels of justice are beginning to turn as federal investigations (legitimate) are hopefully to begin.

Prior to this time we were threatened that arrests would occur if we dared to bring the proof to the FBI, when

Then the DE Dept of Justice had eToys primary counsel removed under the guise that Irell & Manella had a Conflict of Interest / and Irell & Manella was replaced by DE powerhouse lawfirm www.MNAT.com recently an Irell & Manella senior exec mysteriously vanished

What was not disclosed at the time is the fact that MNAT had 100 times significantly more germane Conflict of Interest(s)

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MNAT law firm Fraud of Mattel, Bain, eToys, Goldman Sachs

MNAT handled the merger of The Learning Company (a Bain affiliated entity) with Mattel (eToys largest toy industry unsecured creditor) – such – if disclosed; would have required the immediate disqualification of MNAT as the eToys Debtors counsel.

MNAT did finally get “caught” red-handed supplying more than 15 false affidavits (Perjury) to the DE Federal courts. MNAT then confessed that it had failed to disclose its connections to Goldman Sachs where MNAT handled the DE bankruptcy of Finova (DE Bankruptcy 01-705) and eToys was DE Bankruptcy 01-706.

MNAT is guilty of Collusion to Defraud eToys (as eToys Debtor’s counsel) because it negotiated the sales of the debtor to Bain/ Kay Bee Toys. MNAT, Paul Traub’s firm(s) (Paul Traub’s local counsel (Frederick Rosner) went to many firms in DE carrying eToys with him) (Paul Traub’s firm (Traub Bonacquist & Fox (TBF)) was forced to disband) then Paul Traub partnered with Marc Dreier (doing 20 years in prison for $700 million in fraud) – now Paul Traub is with Epstein Becker and Green.

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$800K attempted Bribe results in Smoking Gun

MNAT and Paul Traub also confessed that the post-bankruptcy petition CEO of eToys (Barry Gold) was secretly a partner with Paul Traub. They were caught after offering us a Bribe for $800,000 and then sending a Threat for us to “back off” from investigating the crimes. The DE Dept of Justice trial attorney (Mark Kenney) then made a lapse linguae stipulating he had handled the Paul Traub/ Barry Gold Conflicts of Interest in the case of Bonus Sales. When we researched what he meant (as punishing one crime does Not give immunity to all others) we found the Smoking Gun. A vanity letterhead (footer) stating that Barry Gold and Paul Traub were partners Before Mr. Gold became CEO of eToys.

Director of DOJ EOUST replaces Region 3 Trustee Roberta DeAngelis when we report the Perjury / Fraud being unaddressed. The US Trustee Press release is timed the very day of our Emergency Hearing (Dec 22, 2004) to hear the Perjury/ Fraud issues.

Stage Stores was a southern TX bankruptcy (00-35078) that was also Co-Debtor with Liquidity Solutions and owned by the founder of Bain and had officer/ director/ stockholders like Jack Bush and Michael Glazer. Coincidently Barry Gold worked for the director and confessed that he got many engagements due to Jack Bush (a Bain executive of many Bain entities). Michael Glazer was also CEO of Kay Bee Toys at the same time. Barry Gold and Paul Traub confessed that Paul Traub’s firm (TBF) paid Barry Gold four (4) payments of $30,000 each during Stage Stores and prior to secretly planting Barry Gold in as CEO of eToys. Where eToys then sold its assets for discounts in the tens of millions to Bain / Kay Bee Toys.

See pages 60 thru 69 of the eToys Transcript where Paul Traub was questioned by the Court directly.

Nothing is as illegal or solid a proof of Breach of Fiduciary duty as the DOJ Trial Attorney (Mark Kenney) document that voided the $1.6 million motion to Disgorge Paul Traub’s firm; for the Stipulation to Settle the Perjury / Fraud contains the following obvious betrayal of a federal officers oath of office;

“WHEREAS the United States Trustee shall not seek to compel TBF to make additional disclosures”

While all of the addressing of Paul Traub and MNAT’s Perjury and FRaud was transpiring – they engaged in another $100 million fraud in the Kay Bee Toys case. Michael Glazer -the CEO of KB – paid himself and Bain $100 million prior to Kay Bee filing for Bankruptcy. Enigmatically MNAT is representing Bain in the $100 million Fraud and Paul Traub had the Unmitigated gall to ask the Court to be the party who prosecuted the preferential transaction. When we pointed out the Perjury/ Fraud and non-disclosure of a serious Conflict of Interest to that Court- the

After we go to Director Lawrence Friedman and seek him to hold his direct email promise to rectify the bad faith; we point out that the fraud has now exceeded $300 million and is stepping across state and case lines. Director Friedman chose discretion over valor and Resigned (going to Bear Sterns).

Because we were a Court approved liquidation consultant. The DE Dept of Justice felt we should be grateful. When Mark Kenney was told of Paul Traub’s emailed threats and made the faux pas of telling us about the Bonus Sales case (and we reported such) he became hostile. MNAT supplied a Forged document stipulating that Haas had simply Waived $3.7 million in fees and expenses. Funny thing is – if anyone reads the purported waiver – it actually stipulates in item 11 that CLI (Haas’s company) is entitled to success fees. Then the Court ruled that Haas was moot and could no longer provide evidence of the Perjury and Fraud because he had “waived” his right to be in court. That Haas was no longer a party in interest or person aggrieved. In other words a person has standing to waive an item – but not standing to point out the purported waiver is Fraudulent.

Paul Traub’s firm(s) and MNAT have already Confessed to more than thirty-four (34) false affidavits and Deliberately deceiving the Court. This is Fraud on the Court by Perjury. But the Judge, when we appealed the ruling that Haas and Collateral Logistic’s Inc., (CLI) is dismissed with prejudice – stated No Perjury was documented and refused to refer the matter to the US Attorney’s office (as is required of all Judges under 18 USC 3057(a)). This bogus opine, 6 months after the confessions, came of the court only came after we timely appealed to the US Dist Ct. See page 52 of the OPINION of Oct 4, 2005 that approved the unlawful immunity for Paul Traub’s firm.

We were given several tidbits by federal persons who really believe in their oath of office. One germane item is the hidden fact that the removed Roberta DeAngelis was quietly/ secretly promoted to the post of Acting General Counsel of the EOUST. Thus when the FBI, SEC, OSC, OPR, Public Integrity Section, the OIG, OGE, President Bush Corporate Fraud Task Force all told us to go to the GC of the EOUST and the local US Attorney – they actually were telling us to go to parties who were being asked to investigate themselves. When we reported this – the DOJ US Trustee press release was finally released and Region 3 Kelly Beaudin Stapleton Resigned (and was replaced by non other than Roberta DeAngelis)

We were also then informed something we could absolutely not believe. The DE US Attorney (Colm Connolly) who was refusing to investigate and prosecute the crime had his own Conflict of Interest. Colm Connolly was secretly a partner with MNAT in 2001 (the very year MNAT began their Perjury/ Fraud in eToys). Therefore Connolly had to either refer the matter to the Public Integrity Section or assign an Independant Prosecutor. See Colm Connolly’s resume

We also had federal justices who did not like what they saw, including persons who helped draft the Bankruptcy Code/ Rule of Law. We were given an Official Court form (to make them aware we had friends) of 18 USC 3057(a). We were also told to submit such with a brief of details and have each and every page time stamped (Clocked Copy)

There is SOooooo much more to this story. eToys is suing Goldman Sachs for $500 million in NY Supreme Ct. Problem is Paul Traub’s firm and Barry Gold (both who have a vested interest in the crimes and work with Goldman Sachs at the time) are running the case. Paul Traub was hand picked to prosecute the matter by Goldman Sachs DE Attorney MNAT. Not only is the proceeding a Sham – because we caught them previously by faux pas of sorts in the public docket record – nearly 1/2 the entire NY Supreme Ct case (# 601805/2002) is Under SEAL.

Then you have not one – but two judges who went after Paul Traub’s firms for their bad faith. One was promoted off the case to the NY Supreme Ct of Appeals – the other (who threatened the counselors that “their lives were on the line”) was promoted 3 weeks later to the 3rd Cir Ct.

Then the DE Federal Ct and 3rd Cir dismissed the case stating the Federal Rules of Appellate Procedures does Not apply to Bankruptcy Ct decisions to the Federal Dist Ct.

Then there is the issue of Jack Abramoff trying to illegally seize control of the Region 3 US Trustee’s office

Abramoff went DOWN because his partner’s haughtier (Johann Hamerski) he offered a $175,000 bribe to eToys shareholder Robert Alber and when Alber said NO – Hamerski threatened to have him killed. Johann then began a campaign against Alber spending $1 million dollars in effort to destroy him. Alber had 2 nervous break downs and ultimately had to endure Brain surgery. Hamerski was tricked to believe he would put Alber in jail – where he travel to AZ and then they upgraded the recording equipment as Alber received a Dream team (OJ like) of Public defenders who wield in carts of files and held Johann Hamerski on the stand in AZ for two days – then Abramoff went through hell.

But the real big story beyond the many specious deaths related to Paul Traub affairs is the fact that Traub Bonacquist & Fox partner (Harold Bonacquist) is listed in the NY State Bar and Supreme Ct as to be contacted through the US Embassy/ Consulate General of the Philippines to make an appointment with him in Istanbul (a non extradict)

committed hundreds of millions and billions of dollars in fraud – AFTER the DE Dept of Justice granted Paul Traub illegal immunity in 2005. There is no doubt those billions of dollars in schemes (and some of the related suicides) could have been avoided – had the Feds did thier job in 2005. Marc Dreier got 20 years – Tom Petters got 50 years – and Paul Traub worked the debtor side of Okun’s 1031 Tax Group as Michael Fox (TBF partner) worked the Creditors’ Trustee side. Okun got 100 years.

But the REALLY BIG STORY is the founder of Bain, whom Traub and Barry Gold met at NeoStar, worked with at Stage Stores and is the single greatest reason (next to DE former Senator being VP – who actually was carted around by Tom Petters airline (Sun Country)).

The single greatest reason why Bain bought KB in 2000, then Bain/ KB bought eToys, who was in bankruptcy. Then Liquidity Solutions (Stage Stores Co-Debtor) bought up all the claims.

Update July 15 2009

NY Supreme Court FRAUD

Hopefully the FBI, NY Supreme Ct, 1st Department and AG Cuomo will look into the on going $500 million in fraud in the NY Supreme Court case 601805/2002

Of the many deceptions proffered upon the NY Supreme Ct is the failure to disclose that Paul Traub’s firm was hand-picked to handle the case by the MNAT law firm in DE.

MNAT is a co-collaborater with Paul Traub to plant Barry Gold secretly within eToys as President/CEO and confirmed Plan Administrator.

It is now confessed that Barry Gold is also a paid associate of Paul Traub’s firm of Traub Bonacquist & Fox (TBF) and a partner with Paul Traub in Asset Disposition Advisors (ADA)

More significant is the fact that MNAT is Goldman Sachs local counsel in DE and received a slap on the wrist sanction for failing to disclose this issue to the DE Federal Court – utilizing more than 15 false affidavits over several years to withhold the information.

Of the many false remarks in the Declaration by Susan Balaschak is the testimony that the three (3) co-chairs of the PEDC is LEGO, Fir Tree and Fisher Price.

Susan Balaschak is failing to inform the NY Sup Ct that both the Director of Credit at Mattel (Chairman of the Creditors in eToys and Mattel owns Fisher Price) and the Director of Credit at Fisher Price were “speciously” coerced to leave their offices early. The Director at Fisher Price was removed after he promised this whistle-blower that he would look into the matter directly. The former Chairman from Mattel had put in an affidavit that MNAT, Traub, Barry Gold and the party that gave Paul Traub’s firm unlawful implied, blanket, immunity had it stricken from the record (see Obstruction of Justice item http://petters-fraud.com/KenneyKB_Obstruction_2228.pdf

Compounding the egregious behavior is the fact that Scott Henkin, the Exec at Fir Tree Value Fund – had confessed to us that he had given his “off the record” approval of the Non-disclosure of the relationship between Barry Gold and Paul Traub.

When we reported this to the Court = Scott Henkin threatened Laser Haas and then was speciously promoted to Senior Executive of DE Shaw. Real egregious behavior considering the fact that Bain sold eToys.com to DE Shaw and Scott Henkin became part of that firm.

After we reported this discovery the founding party DE Shaw himself – Resigned.

Fianlly – Susan Balaschak offers the NY Supreme Court Ellen Gordon as corrobative witness – this to is fraud on the court – as Xroads LLC no longer has Ellen Gordon working with them and Ellen Gordon was Barry Gold’s right hand person who also did her absolute best to nix ever deal to merge the public entity of eToys.

Xroads LLC, Paul Traub and Barry Gold have much to fear as they all work with Wells Fargo – and Foothill Capital (a Wells Fargo entity) loaned eToys $40 million November 2000 and transacted over $100 million prior to March 7, 2001.

The failure to review this preferential and submit affidavits stipulating there is no conflict of interest is already established as a criminal act. Where in the case of In re Bucyrus 94-20786 (ED Disc Wisc 1994) Gellene of Milbank & Tweed firm went to jail, Milbank Firm had to disgorge their entire $1.9 million and lost over $20 million litigation.

You can see the story in the book “Eat What You Kill” the Fall of a Wall Street Attorney by Milton C Regan.

Coincidently the $35 million dollar loan in Bucyrus involved a former Goldman Sachs associate.

Milbank refused to return the $1.9 million until the Court stipulated that it would subpoena Gellene to testify!

More than 100 felony violations plus 34 acts of perjury to perpetrate Fraud on the court – including one of the first Motions MNAT sought was the Destruction of Books n Records (eToys DE Bankr 01-706 docket item 300).

You can see many links (court docket proofs and newspaper items) on the DOJ and Court cover ups of Paul Traub, Barry Gold, MNAT, Goldman Sachs and Bain;

Including the fact that eToys lawsuit against Goldman Sachs in NY Sup Ct has nearly 1/2 of the docket Under SEAL

These items are testified for all federal agents including the Admin of US Court’s and Senate Sgt of Arms readings – Under Penalty of Perjury by Steven Haas (a/k/a Laser Haas) – this the 15th day of July 2009.

The walls are closing in on the Organized Criminal element – a/k/a a Bankruptcy Ring – of Paul Traub and his cohorts.

After initial discussions with the FBI Special Agents on the east coast and west coast – it appears the wheels of justice turn slowly.

However – with the compounding factors that both of Paul Traub’s former partners were arrested (Tom Petters and Marc Dreier) for $700 million and $3 Billion in fraud schemes – the case appears to have heated up somewhat.

With additional information being given to multiple state AG’s, the SEC OIG and local SEC, IRS, FBI task force teams – one can only continue to dance a nervous jig waiting for the swift/hard hammer of justice.

Paul Traub has confessed to acts of Perjury, but the DE federal courts, due to his purported efforts to bring many cases there – have thus far turned a blind eye to Perjury & Fraud and the Court initially said that no perjury was documented.

However, the Chief Justice and DOJ Trial Attorney that have turned a blind eye to the perjury/fraud- now have much explaining to do. The Chief Justice is winding down her cases and retiring and it is only a matter of time before the DE DOJ Trial Attorney and Region 3 Trustee are replaced.

Of the many crimes Paul Traub, Barry Gold and the MNAT law firm have committed include, but are not limited to;

One would be much harder pressed to find a section Traub and his cohorts did not violate – rather than the easy pathway of documenting all the felony violations that Transpired.

Traub also threatened this whistle-blower to “back off” and was so powerfully entrenched within the DE system – the DOJ in DE and the DE BK Court simply ignored the allegation – because Laser’s attorney actually was lacking in intelligence enough that he “emailed” the threat.

Traub, Barry Gold and the MNAT law firm submitted a brief to the DE BK Court stipulating that Laser Haas and his court approved company, Collateral Logistics Inc (CLI) – was so generous that they “waived” the entire fees and expenses (est $3.7 million)

One does not know which is more lacking in sound judgment – the fact that perpetrators of fraudulent documents to the court did not have sense enough to fake the document in its entirety or the intolerable premise that the Court and DOJ would back up the fraudulent endeavor and accept a paper that is obviously bogus.

Nothing is as illegal or solid a proof of Breach of Fiduciary duty as the DOJ Trial Attorney (Mark Kenney) document that voided the $1.6 million motion to Disgorge Paul Traub’s firm;

for the Stipulation to Settle contains the following obvious betray of a federal officers oath of office;

“WHEREAS the United States Trustee shall not seek to compel TBF to make additional disclosures”

What is almost laughable – if it were not so morose – is the fact that the Motion to Disgorge Paul Traub’s firm is digitially signed by Mark Kenney and it testifies therein – Twice – that the US Trustee forewarned the parties NOT to replace key exec’s of the eToys Debtor with anyone connected to the retained professionals (see parts 19 & 35)

While only addressing 3 felony violations – the Disgorge Motion concludes that Fraud on the Court transpired.

The US Supreme Court has stated (and the 3rd Circuit has affirmed the premise) that Fraud on the Court by Officers of the Court is an extra-ordinary circumstance that expunges the statute of limitations. Please see case of In re Hazel Atlas Glass http://altlaw.org/v1/cases/383006

Also Mark Kenney and for Region 3 Trustee Roberta DeAngelis who is now back in as Region 3 Obstructed Justice with the brief that stipulates in the footnotes that it did not and will not address MNAT issues.

Mark Kenney also instructed the SEC to back off from initiating an official investigation – according to Gordon Robinson – who is apparently no longer with the SEC (or changed his email).

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WARNING – there is an Organized Criminal element that has illicit influence over the DE Federal Bankruptcy Court !

Please take the time to review the facts documented below – For Your Sake!

The US Trustee was replaced, the Asst US Trustee made a Motion to Disgorge for $1.6 million – then 9 days later the DOJ Trial Attorney voided the Motion to Disgorge and gave the perpetrators immunity – despite the fact that they Confessed to 34 false affidavits in order to Deliberately Deceive the Federal Court in $200 million in fraud.

Then the perpetrators tested their impunity level and committed another $100 million fraud and the same DOJ Trial Attorney petitioned the Courts to Strike & Expunge the proof of Perjury and Fraud on the Court.

Resultantly the Director of the Exec Office of United States Trustee’s in Washington DC RESIGNED (here) and the Asst US Trustee stepped down as well.

All of whom referred us to the local US Attorney and the General Counsel of the EOUST.

Unfortunately the removed Region 3 Trustee was quietly and speciously promoted to the post of Acting General Counsel of the EOUST. The quiet part is the fact that there was no press release on the high level promotion until years later when we discovered the issue – the specious part is her office was in charge of investigating her case

and NOW – she has been placed back within to clean up her own mess (see belated DOJ UST press release (here))

We all find it rather Odd that there are no other US Trustee press releases since Oct 2008!

We also discovered the fact that the Local US Attorney in DE, whose office refused to investigate or prosecute the Perjury & Fraud failed to disclose the fact that he was a partner with the MNAT law firm in 2001 – the very year that MNAT confessed to failure to inform the Court of the Non Disclosure of Conflicts of Interest.

You normally could see the USDOJ Office of Legal Policy copy of his Resume (here) – but they have yanked it down – we kept a Print Screen Copy for anyone who wants it.

Then we reported those Ethics Violations and Model Rule of Conduct issues to the US Attorney in CA – who never responded.

However;

The Los Angeles Times reported on a story “Shake-up roils federal prosecutors” – where the central CA USA walked into a weekly staff meeting and summarily disbanded the Public Corruption Unit (here)

If you read the entire LA Times story – you will see that it reports that DOJ personnel were Threatened to remain silent OR ELSE!

The party that was given immunity was Paul Traub’s firm of Traub Bonacquist & Fox.

The relevance outside of the previous eToys.com fraud is the basic fact that Traub as Creditors counsel placed his partner (Barry Gold) within eToys as President/CEO – and MNAT helped draft the Hiring Letter that stayed hidden until we documented the Perjury – it contains a clause that allows Barry Gold to choose – whether or not – to apply to the Court per Section 327(a).

Barry Gold committed on the stand Perjury denying his connections to Traub when an eToys shareholder questioned him in 2002 after he supplied a Plan Administrator’s Declaration – Under Penalty of Perjury – stating that the Plan involved “extensive” “arms length” and good faith negotiations between Debtor and Creditor.

That is between Barry Gold and his partner Paul Traub.

The DE Bankruptcy Court warned this whistle blower to back off – as did Paul Traub’s firm – where Susan Balaschak and the whistle blowers own Attorney emailed a Threat that if Laser Haas did not Back Off – not only would he and the Court approved company (CLI) that he owned – they would not get paid – Laser’s career would be destroyed and they would come after him for previous earnings.

When the WSJ released an article the day after the Threat was made July 25, 2005 (here)

It is Our Federal System of Justice that has become an Organized Criminal Enterprise and the fact that this whistle-blower failed English and was spanked by the Houligans should not by the basis for apathy or lack of introspect.

The EOUST replaced the Region 3 Trustee Dec 22, 2004. The US Trustee press release stated the new party is experienced in Fraud matters (here)

Making the crimes extensively egregious and heinous is the fact that the US Trustee testified it forewarned the parties NOT to replace key personnel of eToys with anyone connected to the retained professionals (as such is against the Law Section(s) 101(14), 327(a) and Affidavit Rules 2014,2016) (see Disgorge Motion parts 19 & 35 (here))

The Disgorge Motion concluded, when it did not know of the 100 other crimes that transpired – that the acts of deception were deliberate, rather than inadvertent and Traub’s firm had perpetrated Fraud on the Court.

So it remains inexplicable – that the US Trustee’s website Tout’s its fiduciary responsibility to monitor and Police Fraud (see UST website right hand top corner (here)) – yet the DE DOJ Trial Attorney gave Paul Traub’s firm Unlawful immunity and the promise of the US Trustee to refrain from its fiduciary duty as is testified in PDF pages 8 & 9 (here) as the Stipulation to Settle the Disgorge Motion that is Proffered by the US Trustee states;

“WHEREAS the United States Trustee shall not seek to compel TBF to make additional disclosures”

Researching what would prompt the DOJ to offer future willful blindness – led us to the discovery of additional crimes.

Seems MNAT, Barry Gold and Traub all have a working relationship with Bain and Goldman Sachs.

eToys sold the bulk of their assets to Bain/ KB for discounts in the hundreds of millions and MNAT, Traub and his partner Barry Gold negotiated the deals.

This is Collusion.

KB filed two bankruptcies, in the one DE Bankr 04-10120 – Michael Glazer as CEO of KB paid himself, others and BAIN $100 million – prior to the Bankruptcy Filing.

The party representing BAIN is MNAT

Michael Glazer was a director and shareholder of Stage Stores – and Barry Gold / Traub’s firm worked for Stage Stores and their Directors (Stage Stores is mostly owned by Bain associated parties)

Then Paul Traub petitioned the KB Toys Court to be the one to prosecute the $100 million dollar preferential that MNAT was defending.

Akin to Capone asking Frank Nitti to be the one to prosecute him.

When we pointed out those crimes to the Court – the same DOJ Trial Attorney (Mark Kenney) petitioned the Court to Strike and Expunge the proofs of Perjury and Fraud (here)

This was not the only time Mark Kenney and his associates Obstructed Justice – he also asked the SEC to back off from initiating an official investigation and Mark Kenney, Roberta DeAngelis (as Acting GC of the EOUST) among others petitioned the 3rd Circuit Court to Expunge the case.

They were defending their brief that offered immunity to Traub that the DE Bankruptcy Court approved when the whistle blower appealed the DE Bankruptcy Court’s decision to honor Paul Traub’s threat.

Paul Traub, MNAT and Barry Gold told the DE Bankruptcy Court that whistle blower generoursly waived its $3,7 million in commissions and fees. For eToys was selling all their assets to Bain/KB for $5.4 million. When Laser Haas and his company CLI helped get back over $45 million to eToys bank accounts he had no idea that the reason those parties were making it so HARD to sell – was they were selling eToys to themselves.

When Laser Haas told the DE Court that the Affidavit was a forgery and pointed out to the Court that the very document the parties claim is a Waiver – states that CLI can seek success fees';

The Court said that the whistle blower does not have standing as a person aggrieved – seems you need the court’s permission to point out criminality!

Does not matter much – as Stage Stores was Co-Debtor with Liquidity Solutions.

Right after Paul Traub and MNAT secretly planted Barry Gold within eToys as President/ CEO – Liquidity Solutions and related companies began buying up the eToys claims.

Barry Gold has thus far paid out over $10 million in fees to Traub, MNAT and others that participated in the Cover Up’s.

Where the other $30 million plus has gone and how much to the Liquidity Solutions accounts – despite the fact that they are Collusions – will never be known.

Currently eToys (for the shareholders sake and creditors) is suing Goldman Sachs in the NY Supreme Court.

Being that MNAT represents Goldman Sachs in DE – MNAT nominated Traub’s firm to do the work and the Court approved Traub’s Supplemental Affidavit – that he confessed was false.

It is also learned that Traub’s NY co-counsel of Wachtel helped with Barry Gold’s Director & Officers (D&O) insurance in eToys.

Traub and his cohorts know that he was caught red-handed by Laser Haas due to mistakes forgotten in Court docket records – this may explain why half the NY Sup Ct case 601805/2002 is Under SEAL.

At the same time one of the very first eToys documents that the DE Court approved of – at the behest of MNAT – was the Destruction of eToys Books n Records.

Despite that Destruction – the whistle blower found $2 million in cash deposits hidden overseas that David Haddad was trying to keep hidden.

Whistle blower Haas also discovered that Foothill Capital loaned eToys $40 million in November 2000 and transacted over $100 million that was paid to Wells Fargo prior to the March 7, 2001 bankruptcy filing of eToys.

Barry Gold, Xroads LLC and Paul Traub all having a working relationship with Wells Fargo.

This is a crime of Collusion to Defraud an Estate as is well established in the on point case of In re Bucyrus 94-20786 (E D Wish 1994) The book written by Milton C Regan of “Eat What You Kill” the fall of a Wall Street attorney – documents how a $35 million dollar loan (by a former Goldman Sachs guy) was never reviewed and Gellene went to Jail as Milbank Disgorged it’s entire $1.9 million and lost a $20 million dollar + litigation.

If the reader here does not understand the harm that was being done by the duplicity of the DOJ giving Paul Traub immunity, then I guess it does not matter either that both of Paul Traub’s other partners – Marc Dreier and Tom Petters – committed $700 million and $3 Billion in Fraud!

PRevious writings—————–

On Dec 22, 2004, an Emergency hearing transpired at the DE Bankruptcy Court to address Perjury & Fraud.

When the MNAT law firm and the Traub Bonacquist & Fox law firm Confessed to supplication of more than 34 False Affidavits and Deliberately deceiving the Court – the DE Dept of Justice Trial Attorney – Mark Kenney – gave Traub’s firm a Stipulation to Settle that granted Paul Traub’s firm UNlawful, implied, blanket, immunity and the promise of the DE DEpt of Justice US Trustee’s office (the Police of the Bankruptcy Court) gift to Traub of future willful blindness by the US Trustee’s office.

You must scroll down the PDF to the WHEREAS clauses proffered by the Dept of Justice Trial Attorney.

When those that are paid to protect and serve, seek to abuse that esteemed position of power and trust for the benefit of cronies you have not a measure of law and civility, you have the recipe of disaster that begins as anarchy that ultimately has to foster deep civil unrest!

Hopefully anarchy will not find itself halted in its tracks due to the one entity that is questioned from time to time, but the American public still believes is true blue.

The FBI!

It is not in contention that false affidavits, by sophisticated bankruptcy counsels were supplied to the Federal Court. For they have confessed to the fact. Both the MNAT and TBF law firm have confessed to filing multiple false affidavits.

Upon the discovery of the fraud and perjury issues, Lawrence Friedman the Director of the US Trustee program in Washington DC did remove Roberta DeAngelis as Region 3 Trustee over Philadelphia and Delaware (please see the press release of Kelly B Stapleton here

What is neglected in the confessions to the multiple (and some admitted as intentionally left false) affidavits, is the documentation that they have admitted to more than 34 false affidavits.

Additionally, TBF and Barry Gold have confessed to drafting the egregious, Hiring Letter that gave Mr. Gold illegal authority to Circumvent the Code and the Court by his own volition. While MNAT states that they cannot remember who participated in the drafting of the letter at their firm.

Either MNAT did not draft the letter and has a fiduciary duty to its client (the eToys bankrupt estate) to report the item to the court.

OR

MNAT did participate in the drafting of the Hiring Letter and has to explain how in the world they did work for eToys that they did not bill for. For the very notion that they drafted the Hiring Letter and made the billable hour not appear is a criminal prima facie evidence of mens rea by an actus reus item.

More importantly, the Dept of Justice testified that the “parties” had discussions with the US Trustee’s office concerning replacing key personnel of the eToys Debtor and the US Trustee testified that the Trustee’s office warned the “parties” not to replace key personnel of the Debtor with anyone connected to the retained professionals of the case. As this would violate the “unambiguous” language of Bankr Code 327(a).

After the Dept of Justice testified about this item, the Dept of Justice attorney for the new Region 3 Trustee, specifically Mark Kenney, did sign a Stipulation to Settle that gave TBF law firm implied, blanket, Illegal, immunity with the following unlawful language;

“WHEREAS the United States Trustee shall not seek to compel TBF to make additional disclosures“.

This clause is illegal as the US Trustee’s office is the policing “watchdog” for the sake of public equity protection, as per the Janet Reno Reform Act of 1994 as well as the fact that the whole design of the US Trustee program, as part of the Dept of Justice, is noticed upon every single press release of the US Trustee program, that states the following;

“The United States Trustee Program is the component of the Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws”

Yet, somehow, for an inexplicable reason, the Dept of Justice is utilizing the US Trustee program to give implied, blanket, immunity to Organized Criminal activity that is not in contention. The parties have confessed to their acts that disregarded the US Trustee warning.

Barry Gold submitted the Hiring Letter that was never revealed nearly 4 years after the date it was purportedly signed. Being supplied, in what has to be one of the great attorney slip up’s of this case, as a defense exhibit by Barry Gold himself.

The Hiring Letter documents willful intent to circumvent the Court and the Code by a collaborative effort. Being provided by Barry Gold himself, it is irrefutable.

Combined with the fact that Barry Gold testified, on the stand, that he was not connected to TBF, while both TBF and MNAT have confessed that they filed multiple false affidavits, where the Hiring Letter now demonstrates motive and purpose. One has to ask what is the motivation and reasoning for the Dept of Justice to breach its fiduciary duty.

Cui Bono?

The fact remains, even if the US Trustee states it will deliberately fail to perform its fiduciary duty, is no justification for the Court to jump on the band wagon of lawlessness and agree that such “breaking of the law” is O K.

Doing so is an act of sedition to ones Oath of Office and grounds for impeachment.

Additional reasons why the Dept of Justice is seeking to Cover Up the whole affair, may be due to the more recent discovery that the US Attorney in Delaware, Colm F Connolly was a partner with the MNAT law firm in 2001.

At the barest of minimums, Colm Connolly’s office is guilty of conflict of interest, protocol violations, ethics violations and Model Rule of Conduct violations for not referring the matter to an independent prosecutor or the Public Integrity Section.

Combined with the fact that the US Trustee disgorge motion only mentions the TBF law firm, even though the MNAT law firm confessed to filing multiple false affidavits also and had to participate in either covering up the Hiring Letter or fostering the scheme to defraud the court.

Made more morose by the fact that the Dept of Justice attorney, Mark Kenney, also does not mention MNAT issues when it seeks to give implied, blanket, Illegal, immunity to TBF.

An immunity issue that has apparently become wholesale and adopted by all as we have now also discovered that one of the items the “not seek to compel” clause desires to cover up is the fact that TBF, MNAT and Barry Gold all have undisclosed connections to Bain.

MNAT, TBF and Barry Gold all negotiated the sale of eToys assets to Bain/ KB for discounts in the tens of millions of dollars, while not only remaining undisclosed about their connections to Bain and KB, they also now have confessed to filing more than 34 false affidavits stating they had no conflict of interest issues.

MNAT is now also discovered to have been working with Mattel , Learning Co merger (also a Bain party connection) and being less than candid about the Learning Co issue, MNAT convienently neglected to disclose the issue that the Learning Company merged with Mattel as doing so would have automatically disqualified MNAT representation of eToys Debtor.

Now we have the Dept of Justice breaching their fiduciary duty so maliciously that the US Trustee program, with the General Counsel from Washington DC is acting as an appellee, defending Barry Gold, TBF and MNAT in the 3rd Circuit appeal case 07-2360.

By the way, the Acting General Counsel for the Dept of Justice EOUST office in Washington DC is the former removed Roberta DeAngelis as Region 3 Trustee.

DeAngelis is now apparently promoted to the position of being in charge of investigating her own cases.

Lawrence Friedman had replaced DeAngelis with a press release that occurred Dec 22, 2004, the significance of the date is it was the very day of the Emergency hearing in eToys where the Court Ordered the parties to answer the allegations by January 25, 2005, in accordance with Local Rules.

They, the parties of MNAT, TBF and Barry Gold had no choice but to admit to the false testimony, for the proof provided by Laser Haas was Court docket affidavits of the TBF and Barry Gold. They therefore could not continue to deny their own handwriting that had been previously hidden, now discovered by a lapse linguae and the Public Access to court docket records that began in 2001.

Then a hearing on Feb 1, 2005 occurred where the Court then Ordered that Haas and the eToys shareholders could depose TBF, MNAT and Barry Gold on Feb 9, 2005.

The US Trustee told the Delaware Federal Court that it would make its position on the issues known, prior to Frank Perch’s scheduled travel of Feb 16, 2005.

After the Depositions provided additional proof of fraud and perjury, Frank Perch emailed the US Trustee motion to Disgorge on Feb 15, 2005 as promised. (eToys docket item 2195)

Then, less than 10 days later, Mark Kenney made moot the Disgorge Motion for $1.6 million and supplied the Illegal immunity provisio to TBF (and the rest purportedly) on Feb 24 2005 as a Stipulation to Settle the US Trustee Disgorge Motion (eToys docket item 2201)

Then, the March 1, 2005 hearing occurred to address the issue of fraud and perjury, where the Court speciously Ordered that Laser Haas could no longer speak and that they would not enter the Chairman of the Creditor Committee affidavit into the record that day. (asthe Chairman was who TBF was engaged by, the affidavit testimony that TBF defrauded the Creditors Committee would dam TBF to criminal liability).

However, during the March 1, 2005 hearing, the transcript of which is in the record as eToys docket item 2228. Paul Traub of TBF not only confessed again to filing the false affidavits he also admitted to the Court that TBF paid Barry Gold 4 separate payments of $30,000 each prior to placing Barry Gold within eToys as a “wind-down coordinator” who then became President, CEO and now confirmed Plan Administrator. Where Barry Gold has authorized more than $12 million in payments to TBF, MNAT and other connected parties illegally.

Laser Haas had received a direct email from Lawrence Friedman that he would address the issues of the case by his staff appropriately. Where the removal of Roberta DeAngelis and the Disgorge Motion seemed to provide proof that Lawrence Friedman was performing his fiduciary duties when others would not.

Then, the Stipulation to Settle occurred.

Then, Paul Traub gave the additional testimony of paying Barry Gold prior to placing him “in secret” within eToys.

Then, we discovered the MNAT, TBF and Barry Gold connections to Bain/ KB Toys and the Collusion to Defraud the Estate.

Then Laser Haas also learned that Scott Henkin of Fir Tree Value Fund had approved, “off the record” of the Barry Gold and Paul Traub connections.

Then Laser Haas discovered that MNAT, Barry Gold and TBF were also attempting another $100 million dollar cash fraud in the KB Toys bankruptcy case.

Speciously, you will not find any press release by the Dept of Justice about Roberta DeAngelis promotion to General Counsel for the EOUST office in Washington DC. (you can see all press release by the Dept of Justice HERE

The Delaware Bankruptcy Court then held a hearing as the Wall Street Journal had reported on the TBF disgorge settlement HERE

The Delaware Bankruptcy Court visiting Justice Randolph Baxter refused Laser Haas new CLI counsel from speaking after Randolph Baxter allowed the parties to reschedule the CLI claims hearing, allowed CLI counsel to withdraw and did forbid the new counsel for speaking the very day Baxter did strike and expunge CLI and HAAS Court approved Senior Priority Admin claim for more than $3 million.

Then Haas appealed.

Then, speciously, after being silent for more than 6 months after TBF confessed to paying Barry Gold. The Court did enter an OPINION that vindicates TBF, MNAT and Barry Gold as the Delaware Bankruptcy Court, going into the Twilight Zone, stated that now perjury had been documented. Despite the Fact that the US Trustee had already testified to the Court that the US Trustee had warned the parties against violating the law where TBF And MNAT have already confessed to filing more than 34 false affidavits.

The Judge continued going off the deep end of logic with a 57 page Opinion that refused to refer the $300 million in fraud and perjury to the US Attorney’s office as is required by the Judicial Canon’s of Conduct ( specifically 3(B)3 ) and 18 USC 3057(a). (please see OPINION by Judge Mary F Walrath Here )

This is just as well, we suppose, with the newly discovered evidence that the US Attorney in Delaware, Colm F Connolly, was a partner with the MNAT law firm in 2001. Referring the matter to Colm Connolly office then did not matter as Laser Haas had been informing the Delaware US Attorney, specifically Asst US Attorney Ellen Slights and Deb for quite some time.

Now with the newly discovered evidence that Colm F Connolly was a partner at the MNAT law firm in 2001, when the fraud and perjury began (Please see Dept of Justice notice HERE )

Wherefore, Laser Haas realized a long time ago that the rule of Law was non existent in Delaware, as even the 3rd Circuit has stated that the Federal Rules of Appellate Procedure does not apply to Delaware Bankruptcy Cases (please see 3rd Circuit per curiam Opinion Here ) Where it says on page 7 that the Federal Rules of Appellate Procedure does not apply to this instant case.

Why even both with the mockery.

Just issue a nationwide Memo, all matter of Haas v eToys are prejudged against HAAS, QED!

Despite that readily apparent efforts of cronyism, to protect the Banrkuptcy Ring of Delaware, Haas did file a Citizens Complaint with the California US Attorney’s office Tom O’Brien.

We were supposed to receive an answer from the US Attorney’s office of Tom O’Brien this week, the answer seems to have come in another form of message as the L A Times reported that last week Tom O’Brien did disband and dismantle the Public Fraud and Corruption Task Force.

More importantly, Tom O’Brien apparently threatened his own Asst US Attorney’s that if they revealed any other reason why the Task Force was disbanded, including bad mouthing their boss, that the Asst US Attorney’s would pay a penalty.

Bankruptcy fraud is not only in Delaware but is going on through out this country. Not only was I punished for attempting to expose it I was put into an involuntary without service and then not given a discharge. The Judge in the cases was the same Prudence Carter Beatty who was forced to take a “medical leave” because of her outrageous conduct in the Delta Airlines bankruptcy.
This is just one of numerous complaints made to US Trustees Offfice all of which were ignored.

October 12, 2007

Ms. Carolyn S. Schwartz, Esq.
Office of United States Trustee
33 Whitehall Street
New York, New York 10004

It has come to my attention that the Sturman Brothers Cases are about to be closed. Throughout the course of the Sturman Brothers cases your office has been repeatedly alerted to serious issues of bankruptcy fraud in that an involuntary bankruptcy petition was filed for an improper and illegal purpose. In addition your office has also been advised that there is evidence of serious Trustee misconduct. Misconduct that included theft, embezzlement and conversion of non-debtor property and assets, collusive fee and settlements agreements.
For 18 years the Sturman Brothers cases have been used and prolonged for the improper purpose of obstruction of discovery and justice, to force me to incur excessive legal fees and to ultimately drive me into bankruptcy either voluntarily or involuntarily, by using my own stolen property, and assets against me.
In 1998 and 1999 your office was served with adversary complaints, which were filed on my behalf individually and on behalf of partnerships, corporations and the Estates of Henry and Muriel Sturman, objections to creditors claims and objections to administrative fees
In Adversary Complaint No. 98-9435, entitled Donna Sturman et al. v. Chase et al., which was also served upon your office, my counsel Ms. Helen Davis Chaitman and co-counsel Charles A. Stewart III, stated the following:

Chase’s attempt to demonize and punish Donna and her counsel for their efforts to expose Chase’s culpability in the diversion of Sturman family assets is seriously misguided and hopelessly deficient. By these motions, Chase obviously is seeking to shield its own conduct from scrutiny — its grossly reckless conduct in making millions of dollars of improper loans to Donna’s brothers; its conduct in filing a technically deficient bankruptcy proceeding to avoid discovery in an action brought by Donna in New York Supreme Court; its naked attempt to manipulate these bankruptcy proceedings to gain an advantage over Donna; and even its seeming orchestration of the criminal proceedings commenced against Donna’s brothers. MHT improperly instituted this case on August 4, 1989, when MHT without any other creditors filed involuntary chapter 7 petitions against Howard, Bruce and Wayne Sturman. The filing of the involuntary petitions had two purposes: (1) to stop Donna’s discovery of the debtors’ books and records in state court litigation, and (2) to allow MHT to gain an advantage over Donna. The filings followed Donna’s massive state court litigation in which Donna, ironically represented by MHT counsel, Milbank Tweed Hadley & McCloy (“Milbank, Tweed”), was well on her way to establishing that her brothers had stolen her assets and wrongfully pledged them to MHT and that MHT had aided and abetted her brothers.

At the time the involuntary petitions were filed, MHT knew that the debtors had engaged in criminal conduct, MHT undoubtedly suspected at the time that at least one of its own officers may have engaged in criminal conduct. MHT knew at the time that the involuntary petitions were invalid as a matter of Law. MHT knew at the time that the debtors had defrauded Donna and that the mortgages taken by MHT were subject to avoidance. MHT used the involuntary petitions to seek to gain an advantage for itself over Donna. Through stipulations MHT extended the date for entry of orders for relief until it suited MHT’s own interests. The orders for relief were not entered until April 18, 1991.”

Charles A. Stewart III in an affidavit, dated March 9, 1999, stated what investigation and research had been done prior to filing these complaints . (Although, the affidavit was filed in connection to the Chase complaint the same research was used prior to making any of these complaints or objections.)
As you are also aware an adversary complaint was also served upon your office, which was filed against the Sturman Brothers Trustee, Marc Stuart Goldberg entitled Donna Sturman et. al v. Mark Stuart Goldberg Adversary Complaint No. 99-8076.
In that adversary my counsel set forth serious allegations against the Mr. Goldberg, which included the following:
“The Sturman Brothers Trustee, Marc Stuart Goldberg (“Trustee Goldberg”) was openly antagonistic to Ms. Sturman and colluded regularly with the institutional creditors, whose claims he knew were voidable and not bona fide claims.”

“ The Goldberg Trustee with the bankruptcy courts approval effectively precluded Ms. Sturman from having access to funds from the partnerships, corporations, and her parents’ estates, despite the fact that she had an undeniable interest, thereby preventing her from affording, among other things, attorneys to represent her.”

Although duty-bound to close the estates “as expeditiously as compatible with the best interest of parties in interest,” the Trustee actively sought to “milk” the Sturman bankruptcy cases for as long as possible to enrich himself, to the detriment of the interests of other creditors, particularly Donna Sturman. . Throughout these bankruptcy proceedings, the Trustee has been blind to the ethical consequences of his conduct, focusing instead on improving his own position, financially and otherwise, to the detriment of the Estates and its creditors, particularly Donna Sturman. “(Donna Sturman et al. Adversary Complaint against Trustee 76).

In addition my counsel my counsel filed a detailed reply to the objections of the Trustee and The Chase Manhattan Bank to the Claims Donna Sturman, which were also supported by a preliminary forensic accounting done without the benefit of discovery. Which was also served upon your office in their reply my counsel stated the following:
“Donna asserts claims in three capacities: (a) as an unsecured creditor who has filed a $20 million proof of claim in each of the above estates and who holds additional claims; (b) as a 25% owner of various non-debtor partnerships and properties which the trustee has been managing without her consent since 1991 as well as various debtor assets of which Donna is the equitable owner; and (c) as a beneficiary of the estate of Muriel Sturman. Her claims are well-founded and will be proven at trial.”

“Chase obviously is seeking to shield its own conduct from scrutiny –its grossly reckless conduct in making millions of dollars of improper loans to Donna’s brothers; its conduct in filing a technically deficient bankruptcy proceeding to avoid discovery in an action brought by Donna in New York Supreme Court; its naked attempt to manipulate these bankruptcy proceedings to gain an advantage over Donna; and even its seeming orchestration of the criminal proceedings commenced against Donna’s brothers. Chase, not Donna, has characterized Donna’s claim against it as one for aiding and abetting a violation of fiduciary duty. “

The preliminary forensic accountant investigations evidences that even if my alleged creditors, (all of whom aided in allowing me to be defrauded), claims were paid, I was not and could not be insolvent. See Donna Sturman Attorneys reply to the objections of the Sturman Brothers Trustee and The Chase Manhattan Bank.
In short, Donna’s claims total well over $10,543,133. If Donna prevails, she is entitled to be paid for this money dollar-for-dollar because her claims arise from Donna’s ownership interest in assets and property which were never property of the estates due to their having been fraudulently diverted and appropriated by the debtors.

Even though Donna has not yet had a meaningful opportunity to engage in discovery, she nevertheless has gathered documentation to support her claim that the debtors improperly diverted cash pre-petition which belonged to her. Although there are undoubtedly other defalcations regarding which she has not yet obtained documentation, the following siphoning of funds is documented and was presented as evidence to the Bankruptcy Court: H. Development Corp. $14,438,016 of “loans to stockholders” (See Tax Return annexed as Exh. A to the March 11, 1999 Reply of Sturman to the Objections of the Trustee and Chase to the Claims of Sturman (the “Reply”)); Yorkville Associates: $2,250,470 “due from affiliates’ See Tax Return annexed as Exh. B to the Reply); A.J. Griffen. 902.61 (calculated by subtracting cash receipts from affiliates (reflected in Exh. C to the Reply) for the period 1982 through l989 of $205,282.04 from cash disbursements to affiliates (reflected in Exh. 1) to the Reply) of $414,184.65 for the same period); Pelham Associates: $648,164 based upon a 1992 Federal Tax Return (Exit. E to the Reply); Cauldwell Management $141,275.66 (calculated by subtracting loans from affiliates (reflected in Exhibit. F to the Reply) of $236,137.07 for the period 1982 through 1989 from loans to affiliates (reflected in Exh. G to the Reply) of $377,412.73 for this same period); Pelham Racquetball & Health Club: $1,025,541 based upon a 1983 financial statement (Exit. H to the Reply); Wayne-Adam Corp: $20,300 based upon a 1990 Federal Tax Return ($10,000 as loans from stockholders and $10,300 as due from affiliates (Exh. I to the Reply). These documented transactions of siphoning of money alone totals $l8, 812,650, of which 25 percent or $4,703,162.50 would have belonged to Donna.

On or about February 1, 1999, my counsel also filed an Omnibus Objection to Claims in which I objected to the claims of Chase, SFS Management, Bank of New York, Stroock & Stroock & Lavan , Leon Charney, Spirelli Electric, Boston Safe (as to the Wayne and Howard estates only), and JMR Concrete of Long Island (as to the Wayne and Howard estates only). My counsel also filed objections to the Administrative Claims of Professionals and Trustee Fees.

In addition based upon the filings and circumstances, I would like to understand how your office did not find the “related to”, involuntary filed against me, on or about April 9, 2002, was not only not filed in good faith (without service to me or my counsel), but was quite obviously just a continuation and “related to”, what could not be accomplished in my Brothers cases. That being discovery and recovery of what has and was stolen, embezzled and other punitive damages for what has been allowed to transpire in these cases.
Most importantly I would truly like to understand and know what Bankruptcy Code or Rules or United States Trustee office rules, permit a Trustee to have an adversary complaint filed against him and is not forced to answer or account for his actions, but is permitted to release himself in a collusive settlement with another Trustee? To give himself a release for serious allegations of fraud, embezzlement, filing false statements, making false accounts, failing to protect books and records that were subject to discovery sanction in another Court, conflicts, fee agreement, which included and openly discussed in court “kick back” deals with management of non debtor property.
Based upon the circumstances and pending claims, it is clear that my Brothers cases were used to intentionally strip me of my properties and inheritance and after that goal was accomplished ,I was to be forced into bankruptcy either voluntarily or involuntarily. The law firm, Pollack & Greene, that put me into involuntary was being sued for fraud in New York State Supreme Court and recent found evidence that they had a more serious conflict that was previously known. In UCC filings it seems Pollack & Greene’s largest creditor was Chase Manhattan Bank and that claim was settled a mere 10 days after they served a temporary restraining and preliminary injunction, not on me or my counsel, but on my Brothers Trustee sometime in December 2001. To date I have never been served with this order. In fact at the time my counsel was supposedly pursuing an appeal overturning their arbitration award and fraud claims against them in New York State Supreme Court. All of which documents I would be more than willingly to supply to your office.
In fact on May 20, 2002, I wrote not only to your office but to numerous parties in the United States Trustees’ Office in Washington, D.C., although lacking in typewriting abilities, nevertheless the substance and evidence support the need for an immediate investigation. I have never been notified in writing about why there was need to commence and investigation into these cases. The serious conflicts of interests that have permeated these cases, and casually been ignored, allowed because only one party to these cases raises objections to them?
I have continually been forced to pay for legal fees while the Trustee has used my money to intentionally “bleed” me out, including his own law firms, as the adversary complaint filed by Ms. Chaitman and Mr. Stewart detailed. I walked into Milbank Tweed Hadley & McCloy in 1986 worth $20 million dollars in property and assets stemming from my parents estates, that is not an unsecured claim that puts me at the back of any line. Since that time as my counsel stated in their reply to the objections of the Trustee and Chase, I have been the “victim of a virtual gang rape”. The culmination of those… efforts was not just an objection to my proof of claim but to sub sequentially put me into involuntary and have my claims settled collusively and releases given to all parties for their gross misconduct. To say the least the emotional and financial damages for what has been allowed to transpire here are real and ongoing for my children and me.
My proof of claim, as Mr. Goldberg testified, included proof, of not just a claim but of pending orders, proof of property rights and proof of what had been stolen diverted and embezzled from me or the Sturman Family Enterprises. Putting everyone on notice that any property or assets that came into these cases was already stolen, embezzled and misappropriated, and the Trustee had a duty to trace and sequester according to pending Court Orders. All of which you are aware he did not do. As you certainly must be aware I am not referring to insignificant amounts

I would appreciate in understanding what set of Bankruptcy Code and Rules the Sturman Cases are administered under? I have found no cases that permit the following:

(a) Notice given that the involuntary petition was not filed in good faith by a bona fide creditor whose loans were not only subject to a dispute but judicial scrutiny in another court being allowed to convert those false claims into secure valid claims by filing a collusive involuntary bankruptcy proceeding ;

(b) The Trustee takeover of non-debtor property and assets on an unsigned order, which was later accomplished under an ex parte order over the objections of a non-debtor owner and partner to deprive that owner of funds;

(c) Use of stolen embezzled non-debtor property and assets to satisfy false claims and collusive settlement agreements, fee agreements or allow a Trustee to use these funds for his own personal “piggy-bank;”

(d) The Trustee intentionally keeping an owner, beneficiary, partner and shareholder from her own assets to keep her intentionally impoverished and unable to defend herself;

(e) Using the property and assets of a beneficiary’ estates, partnerships and corporations to fund vexatious litigation, to aid in the conversion of non estate property to “estate” assets?

(f) Allowing a Trustee to not have to account for missing stock and/or proceeds totaling over $18 million dollars, also not belonging to debtor estates?

(h) Allowing property and assets to be sold, transferred, and distributed, in violation of pending New York State Supreme Court and Surrogate Orders?

As your office was aware I was forced to enter into a settlement with the Sturman Brothers Trustee in June 2001, for $3.75 million dollars. In that settlement agreement the Trustee recognized that property obtained by fraud of the bankrupt, or by other tort, is not property of a bankruptcy estate, so it is quite obvious that the settlement made by my Trustee and my Brothers Trustee was not only obviously fraudulent and collusive, but the funds used to satisfy all claims were comprised of the stolen and embezzled property that belonged to me and the partnerships, corporations and Estates of my parents. Any funds that I have been given were already mine to begin with, they are not a settlement of any of my claims, but merely what was already mine and used by the Trustee and others to intentionally keep me impoverished and unable to defend myself. Is it your office policy to permit such conduct?
In settlement hearings held on June 22, 29, and July 3, the Trustee testified under oath, that my claims were “real and frightening” and yet based upon no further discovery or evidence, he no longer found them to be frightening with the aid of my “trustee”, Alan Nisselson, who was obviously brought in to expeditiously “dispose” of them.
I also wish to bring to your attention that neither Trustee Goldberg, nor Trustee Nisselson, has or had any standing to settle or release litigation filed by me, on behalf of the Partnerships Corporation or Estates of Henry and Muriel Sturman, as they are not beneficiaries, shareholders or partners. I was also under the impression that it was against public policy to allow claims sounding in fraud to be settled and releases, and parties guilty of fraud releasing themselves from personal liability with the funds and assets, that they knew were not only not property of the debtors estates, but were already stolen.

“THE TRUSTEE RECOGNIZES THE VALUE OF DONNA’S ARGUMENT …(general rule is that “[p]roperty obtained by fraud of the bankrupt, or by other tort, is not properly a part of the assets of a bankruptcy’s estate” where under state law fraud gives rise to constructive trust), cert. denied, 469 U.S. 1207 (1985); In re Petition of Treco, 205 B.R. 358, 362 (S.D.N.Y. 1997)(more efficient for bankruptcy court to determine whether to impose constructive trust over debtor’s assets); In re Allen-Bradley Co. Inc. v. Commodore Business Machines, Inc. (In re Commodore Business Machines, Inc. ), 180 B.R. 72 (Bankr. S.D.N.Y. 1995)(“A constructive trust may be imposed on property obtained by a defendant by fraud”,”[p]roperty held by the debtor subject to a constructive trusts vest the estate with bare legal title to that property subject to the superior equitable interests of the true owner…. That bare interest is not ‘property of the estate’ available to satisfy the claims of creditors”)).

On July 3, 2001. my counsel, Philip Guarino, cross-examination of the Trustee, Marc Stuart Goldberg, testified under oath the following:

Tr.30-43:
Q. Mr. Goldberg, Donna Sturman asserted her claims against her brothers’ prepetition, correct?
A. She commenced litigation against her brothers’ prepetition, yes.
Q. Do you know whether those claims were incorporated into the proof of claims that she filed inn this Court?
A. Donna’s proof of claim was approximately nine inches thick or a foot thick. It referred to a number of pending litigations and appended pleadings from those litigations to a proof of claim.
MR. GUARINO: Your Honor, I would like to mark the proof of claim of Ms. Sturman in the Howard Sturman estate as Sturman 2.
THE COURT: Okay.
(Proof of claim of Donna Sturman marked Sturman Exhibit 2 for identification as of this date.)
Q. Do you recognize what is marked as Sturman’s Exhibit 2?
A. Yes, 2.
Q. Could you tell us what it is?
A. It is a copy without the 9 to 12 inches. . . inches of additional paperwork of the proof of claim filed by Donna Sturman in the Howard Sturman case and my recollection is that there were essentially the same proofs of claim filed in the Wayne and the Bruce cases as well.
Q. If you would turn to page 2, Exhibit A. What is the amount of the claims as stated?
A. At least $20 million.
Q. Could you tell us what Exhibit B purports to be?
A. I believe Exhibit B purports to be entities in which Donna Sturman asserts that she has an interest.
Q. If you would go to the second page of Exhibit B and the subsequent pages.
A. Yes.
Q. The basis for Donna Sturman’s interest in certain entities or properties as set forth; is that correct?
A. Yes, there are bases for Ms. Sturman’s asserted interests.
Q. And no less than 16 times did Ms. Sturman assert a constructive trust; is that correct?
A. I will have to count them.
Q. I will represent to you it is 16. But you would agree would you not, that certainly on numerous entries she asserted constructive trust?
A. That is correct.
Q. And the next-to-the-last page of the exhibit is an index of Exhibits C through N to the Proof of claim; is that correct?
A. That is what it asserts to be.
Q. And you would agree that that index represents that the State Court pleadings filed by Ms. Sturman against her brothers as incorporated in the proof of claim?
A. Yes.
Q. To your knowledge, did Donna Sturman ever release any of her claims against any of her brothers?
A. Not to my knowledge.
Q. To your knowledge, has she consistently throughout these proceedings asserted a constructive trust?
A. She asserted constructive trust theories going back to March 1992 and there was no time upon which she withdrew those claims of constructive trust.
Q. To your knowledge, did anybody else in this proceedings, any other creditor assert a constructive trust?
A. Such as Chase or Boston Safe?
Q. Yes.
A. They have not, to the best of my knowledge, asserted a constructive trust; certainly, they haven’t pursued a constructive trust, correct. They have pursued no constructive trust, correct. They have pursued no constructive trust theory to my knowledge.
Q. And you have no seen any document, have you, that has been filed in this proceeding in which Chase or any other creditor attempted to trace proceeds?
A. There is none that I could recollect.
Q. If Donna Sturman’s constructive trust theory were to be valid, what…would that mean I terms of the impact upon the estate?
A. It would be enormous.
Q. In what way?
A. As I understand it, Ms. Sturman asserts through her constructive trust theory hat she would be entitled to somewhere in the neighborhood of 8 to 12 to $1 million, predicate upon that theory as equity, as it were of the brothers’ properties and that if, in fact, Ms. Sturman were correct or her theory was indeed proven, it would be approximately $5 million in cash that existed at the time of the filing of the bankruptcy cases would be a fund upon which Ms. Sturman would be able to attach in connection with her allowed constructive trust claim, fees which had been paid to professionals and disbursements which had been made to creditors may be subject to disgorgement requests or litigation. It would be absolutely enormous. Not to mention the obvious cost that would be assumed by the estates, Ms. Sturman and others in connection with that litigation the time that would be involved.
Q. In fact, there might be disgorgement that would be required; would there not?
A. I just testified to that.
Q. Throughout the course of this proceeding, you did do a certain amount of investigation, did you not, to try to determine the purpose for which loans had been made prepetition?
A. Yes.
Q. In fact, you filed a complaint objecting to the grant of discharge of Bruce Sturman; did you not?
A. Yes.
Q. And in that complaint, you set forth a factual basis concerning the Cooper stock and margin calls, correct?
A. I believe so, yes.
MR. GUARINO: Your Honor, can I mark the complaint as Sturman Exhibit 3, please.
THE COURT: You may.
(Complaint marked Sturman Exhibit 3 for identification as of this date.)
MR. GUARINO: May I hand this to the Court?
THE COURT: Yes.
Q. Mr. Goldberg, let me be blunt about it. To the extent Mr. Parry was implying that you had no knowledge or did no investigation concerning the purpose for certain loans, he was incorrect; was he not?
A. Yes.
Q. In fact, if you will turn to Sturman Exhibit 3, page 11, paragraph 49 and 50. You allege there, do you not, that the Bank of New York loan and the Chemical Bank loan in the aggregate amount of $1,150,000 was used to repay the margin debt, correct?
A. Yes.
Q. Throughout this complaint you referred to the fact that there was margin debt and the margin debt was being called?
A. Yes.
Q. And as a result of that margin debt being called, loans had to be obtained, correct?
A. Yes.
Q. So I assume you had some factual basis for filing this complaint, correct?
A. I hope so.
Q. Let me refer you to paragraph 26 on page 7. Do you see that you state in the Butler action the Court issued injunctive relief to Ms. Butler in enjoining Sturman regarding certain family-owned enterprises?
A. Yes.
Q. Ms. Butler is defined as Donna Sturman, correct, earlier in paragraph 23?
A. Ms. Butler, as I understand, is the other party to the settlement agreement that is being proposed in this matter and that is Donna Sturman.
Q. Could you explain to the Court what you meant here in paragraph 26?
A. There was a stay in Court that granted Donna Sturman injunctive relief in connection with a certain interfamily dispute.
Q. Was that in connection with a complaint she filed against her brothers?
A. A complaint, yes.
Q. Am I correct that the basis of that complaint, at least in part, was fraud and diversion of assets?
A. Yes, to the best of my knowledge.
Q. Do you know, are you familiar with the standard of granting injunctive relief?
A. As an attorney, yes I am.
Q. As I correct that to obtain injunctive relief one must show a probability of success on the merits?
A. A likelihood of success, as I understand the language.
Q. What was the basis of your objecting to the grant of discharge of Bruce Sturman?
A. Fraud. Let me just go over the document, if I may. It sets forth on page 4, intent to hinder, delay, defraud his creditors, he transferred to property, he concealed, destroyed or failed to keep vital records and that in connection with her bankruptcy case he made false oaths and accounts.
Q. As Trustee, you took charge of the Debtors’ books and records which bear upon the finances of the three brothers?
A. As best I was able to.
Q. Am I correct that there are prepetition books and records which bear upon the finances of the three brothers?
A. There are some, yes.
Q. On their financial statements?
A. There are.
Q. On their tax accounts?
A. Yes.
Q. On tax returns?
A. Yes.
Q. On banking records?
A. Yes.
Q. In determining to present this settlement to the Court did you consider whether from the documentation available there would be an ability by Donna Sturman to prove her case?
A. I didn’t limit it to the documents that are presently available. I believe there may be other documents that would be obtainable, certain bank documents and other related materials as well as the documents which do exist which would assist Ms. Sturman in proving or not proving her claims.
Q. Are you aware of anything which would form a belief on your part that it would be impossible for her to prove her claim?
A. I think it would be difficult for all of us to go through that process, but I don’t believe it would be impossible for her to prove it.
Q. To your knowledge, has Donna Sturman been afforded discovery?
A. In connection with the claims asserted in the constructive trust?
Q. Right.
A. I don’t believe she has either been engaged or sought discovery I connection with those claims or if she has, she hasn’t yet proceeded.

As your records in these cases evidence, it was in fact Mr. Goldberg and his counsel who continued the sale, transfer and diversion of assets and property from me, knowingly and willingly violating pending New York State and Surrogate Orders, which barred him from doing so.

The Trustees’ counsel, Mr. Spielberg also testified at the same July 3, 2001 hearing. Tr.105-111:

“I would say that no serious person could maintain that Donna Sturman was not badly wronged and damaged and hurt in a variety of ways by her brothers prior to these cases being brought.

She filed a $20 million claim and that claim talks about constructive trust and the Trustee has filed objections. I think, Judge, I signed my name to those objections, and I believe I did my job as a lawyer, and I am not ashamed of it, to have signed my name to an objection to say that Donna’s claim should be no more than a million dollars. ….

But no lawyer is any better than the case he has got and no claim or objection to a claim is any better than the acts of law and circumstances and context in which it is presented.

In making this settlement, the Trustee has determined finally to reject the myopic view of Donna Sturman’s claims that have prevailed here for at least a decade. He has confronted the reality of the fact that Donna Sturman has a claim and has a significant claim and that claim is serious enough and large enough and frightening enough to make a very substantial payment to her justified. The basis for that claim, the basis for his judgment and the reason was in his judgment that it met the lowest level of reasonableness in making the settlement, and the reason the settlement should be granted is that there are substantial and meaningful and undeniable justifications for Donna’s claim. She has presented and there is evidence and there are indications that in the period before the filing of these cases her property interests were evaporated by her brothers. It appears likely that the claim she makes that the $6 million or 5 or $6 million of cash that the Trustee came into possession of at the beginning of the cases were proceeds of the liquidation of Donna’s assets. If that is so, we believe that you would permit Donna to make a claim of constructive trust. If that happened Donna would wipe out the estates. There would be disgorgement and there would be mayhem in the final stages of these cases. It has been shown that the Muriel estate was evaporated, defrauded, and emaciated and defalcated by her brothers. It is clear that Donna has a prima facie claim to take the entire Muriel estate. Would she ultimately prevail in that claim, that is not to be determined on this proceeding. Would she ultimately prevail on the constructive trust claim? That is not to be determined in this proceeding. The law is very clear that Your Honor is not to be a trier of the facts on the underlying claims. We have put before you the considerations and it’s in our motion and I needn’t remunerate the considerations that were decided and determined and have been followed out in re: Best Products.

With respect to the administration of this estate and the potential for claims that Donna could make as a result of it, I remind Your Honor that Donna and the Muriel estates in which Donna probably has a 100 percent interest or may have that interest, owned between 25 and 50 percent of a $16 million asset which over ten years they received zero return upon. The Trustee in doing his job, in following Your Honor’s order to run that property in derogation of the property rights of the Donna and the Muriel estate. There can be no dispute to that. The argument, if this is the argument that Mr. Parry was inferring or will make when he closes, the argument that because Your Honor issued an order that gave the Trustee the right to run the property, he exculpated the estates from the claim of property rights is just absurd. It is unconstitutional. It is an unlawful, unconstitutional taking of her property without compensation. You can’t do that. Nobody can do that. She has a claim. We used her property without paying her for ten years. That claim if this settlement is not approved, that claim will be made here. That claim will be heard by Your Honor, and it worries me because it is real and it is clear.”

Furthermore, the Trustee bought the mortgage, paid himself, in essence, an above market interest rate in derogation of the rights of Donna Sturman and Muriel Sturman. Was that technically legal? Sure. There was an order that permitted him to do it. Is it right? Will it stand up? Will it beat scrutiny in litigation? Who knows. Likely not.

In conclusion, Judge, I ask you not to focus on the objections that were filed.
I ask you not to focus on the myopic arguments that are made against Donna Sturman’s claims. What I ask you to focus on, Judge, is this: In addition to the factors that are incumbent upon you to address, remember this in terms of Donna’s constructive trust claim and the other unliquidated claims she makes, there is no real question that she has an entitlement and she deserves to be paid for them. The constructive trust claims could wipe out the estate.

That being the case, the question is not whether it is 2 million or 3 million or $3,735,000 that should be paid. The question is whether in the Trustee’s reasonable judgment he has brought before you something that meets this very low standard and I ask you, Judge, to find that he has and it is appropriate in this case that this settlement be approved.

Did your office not find it at all suspect that I could be placed into an involuntary bankruptcy less than a year later without notice or service to me or my counsel? I think you will agree with me that based upon the testimony above, it is clear that instead of finally giving me what was already rightfully mine, it was determined that the parties to these cases would use other means to justify their conduct. Or is it the policy of your office that because the Trustee failed to do his job and the Court abused her jurisdiction and powers, that I walk away from my inheritance and allow the Trustee and others to have it?
The circumstances of the involuntary petition filed against me without notice or service to me or my counsel, by my previous counsel Pollack & Greene, based on the circumstances and pattern consistently used against me, acts taken without service, or service to a wrong address, is clear was just a continuation and “related to” what could not be accomplished against me in my Brothers cases.
Mr. Nisselson had before him numerous pre-petition claims filed by me and during the course of the Sturman Brothers proceedings that were based on other counsel review before filing them; as such he had a fiduciary duty to not become a party to these claims and cannot claim that he was not aware of them. Instead Mr. Nisselson knowingly and willing chose to aid and abet the Sturman Brothers Trustee, his agents and the institutional creditors in their fraud.
Instead of fulfilling his fiduciary duties to report such fraud and that the Involuntary filed against me was not filed in good faith or that I could even be insolvent Mr. Nisselson not only chose to aid and abet in fraud, obstruction of justice false statements false filings use of stolen embezzled property and assets not belonging to debtors estates and to use such proceeds to satisfy his fees and expenses.

Even after orders for relief were supposedly entered against me on or about May 14, 2002, my counsel filed an objection to another collusive settlement the Trustee was making with one of the executors of my Mothers estate for his “silence” 3 days later. (and approved by Judge Beatty in violation of her jurisdiction and pending Surrogate Court orders). Those Orders also prevented the sale of the so called “86th Street” Yorkville Associates partnership property that I was stripped of. Still no one raised any objections or questioned how or why I could be placed into what obviously an collusive fraudulent involuntary “related to” proceeding?
In the adversary please note and this is also referred to at the July 3, 2001 hearing, at the start of these cases Mr. Goldberg had turned over to him $6.25 million that did not belong to the debtor’s estates, money that also belonged to me. I would once again like to understand how and why Mr. Goldberg and his law firms have had at their disposal and been permitted to use non debtor properties and assets over my objections as their own personal “piggy-banks”?
I don’t understand why in another case before the same Judge your office objected to this ( In re Palm Coast: Matanza Shores Ltd. Partnership) and yet it was okay for the Trustee to shop the Sturman Brothers Cases around so everyone could profit at my expense?
In fact at a July 15, 1996, hearing the Bankruptcy Court stated the following:

THE COURT: The fact of the matter is it is also the trustee’s duty to determine who the owners are. Remember, the trustee here is in a very unusual position. He was given authority to manage properties that he is not the direct owner of. The result is that the trustee always has the duty under the Code to turn over property to the true owner. This is not about trying to make bucks for the law firm. It is not about trying to pay off the big creditors. It is about trying to create an estate to be disbursed to whoever it rightfully belongs to Tr. 15.

There were numerous documents and evidence including in my Brothers criminal trial that the loans made to my Brothers were not made according to banking policy and could be voided by me. And yet those lenders have been allowed to use our courts systems to intentionally strip me and my children of my inheritance and property and cause severe emotional and financial damage.
How is it that I could be intentionally kept impoverished, numerous threats and then put into bankruptcy and then to top it off I don’t even get a discharge?
. And lastly I would like to understand how a bankruptcy Judge with no jurisdiction over properties and assets is allowed to give her approval to all of this, allow these cases to be prolonged and finally when she has serious adversary complaints filed just ignore them, approve collusive settlements, and then 3 years later (even though fully brief and awaiting a decision from her) dismiss that complaint for lack of prosecution?
I was under the impression when I reserved my rights by notice to the Court on May 9, 1991, and thereafter, I had rights, and yet to date they have continually been trampled upon. Including disability rights, in which the law firm that filed the collusive false involuntary petition against me had a full and detailed medical account of and what the effect of prolong stress has on me. Am I not afforded the same constitutional, civil, disability and equal protection under the law rights as other parties?
The collusive involuntary proceeding filed against me has caused my children and me, extreme and ongoing financial and emotional damage, this is in addition to the damages my Brothers cases have caused.
Although I was under the impression that bankruptcy was to be used to give an” honest debtor a fresh start”, nothing could be further from that in these cases. Instead my children and I have been subjected to what could only be viewed as an ongoing attempt to give me nothing more than a “smelly finish”.
While I may not be as “sophisticated or education” as the parties to these cases are, I know there is something wrong here that another “related to” collusive involuntary can not just make disappear as if it never happened. I would think it falls under the category of continuing and aiding and abetting in bankruptcy fraud.
At this time I request a full and detailed account of all property and assets that have come into these cases,(not unaudited), but audited, and how the Trustee has been permitted to hold and use property and assets belonging to the Estate of Muriel Sturman, for which I am a beneficiary. (And no release or settlement has the authority to permit Surrogate Court Orders to be violated from filing an outstanding compulsory accounting).
I would truly like someone in your office to explain to me, in writing within (10) days of receipt of this letter, how all of this is acceptable and allowed by your office. To date I have never received any explanation from anyone, so that I may proceed accordingly.